President Barack Obama has said it over and over again: Health-care inflation has gone down every year since the Affordable Care Act passed in 2010. According to theBritish Broadcasting Corporation, it has almost been a mantra for the nation’s chief executive. One prominent recent example came on Nov. 5 as he dissected his fellow Democrats’ recent loss in midterm elections. “Even as we’ve enrolled more people into the Affordable Care Act and given more people the security of health insurance, health-care inflation has gone down every single year since the law passed, so that we now have the lowest increase in health care costs in 50 years,” Obama said.
While that statement may be true, its implications are that Obamacare should get the credit for putting the brakes on out-of-control health-care costs. Some members of an unsuspecting public might even deduce that costs have fallen, and that they’ll stay under control. To all that, health-care economists, consultants and even some government officials say: Think again. First, as a closer reading of Obama’s comments suggests, health inflation is easing, which isn’t the same thing as saying costs are coming down. By virtually all accounts, costs still are growing, and at a pace that exceeds any other sector in the economy. Some say medical inflation still is double to triple that of any other type of price growth.
Recent reports from the Bureau of Labor Statistics imply that costs may be getting under control, but the numbers are fuzzy. The agency says medical-care service prices are rising in line with the country’s overall 1.7 per cent inflation rate. Hospital services, however, are up 3.7 per cent according to the BLS, and analysts say hospital services comprise at least half of all health-care spending. Others believe a more comprehensive look indicates overall health inflation is rising by more than six percent.
More important, the nation’s massive health-care system, which consumes nearly 18 cents of every dollar spent in the US, continues to be voracious, economists say. It may go on a diet every so often, but its appetite continues to dwarf that of the rest of the economy. And by many measures, its growth rate is speeding up again. Ultimately, observers say, health prices haven’t slowed enough to make a difference in this broader trend. That means hopes for a so-called bending of the cost curve-or the flattening of medical expenses-hasn’t come to fruition, says Paul Keckley, managing director of Navigant Consulting’s [ NCI, -1.47 per cent health-care practice.